Negative yield on German 10-year bund yield in Europe followed by a strong US retail sales reading strengthened the offered tone around EUR, pushing the EUR/USD pair lower to around 1.1196 (38.2% of 1.0517-1.1616).
Back above 1.12
Spot is back above 1.12 levels, although recovery is fragile. The area around 1.1196 is also a rising trend line support (trend line drawn from Dec low and March 2 low). A rebound from the confluence of technical support could result in a short-term loss of momentum.
The focus now is on the US FOMC rate decision due tomorrow. There is a widespread belief in the markets that Fed would do a balancing act by playing down global growth slowdown and Brexit fears, but at the same time would carry dovish tone. However, significant majority also believes the bank could express readiness to hike rates if there is no Brexit.
Exploring technical levels
Area around 1.1196 (38.2% Fibo + trend line support) is a strong support. Should the pair breach it, preferably on hourly closing basis in the overnight trade, downside towards 1.1144 (Mar 24 low) stands exposed. A violation there may translate into a sell off to 1.11 handle.
On the higher side, 1.1234 (Apr 14) could act as a resistance, which if breached following a rebound from confluence of support at 1.1196 would signal short-term bottom has been made and a subsequent correction could end up in range of 1.13-1.1342.